Sensex loses another 174 pts, but FIIs continue to pile up

ET Bureau|

Jun 13, 2009, 02.29 AM IST

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MUMBAI: Key equity benchmarks Friday ended lower for the third time in five days, but were still up close to 1% over the last one week. Index of industrial production (IIP) reading of 1.4% for April (compared with a 0.8% fall in March) was way ahead of market expectations, but brokers said much of the recovery had already been factored into stock prices.

Provisional data showed foreign institutional investors continuing with their buying spree, net mopping up Rs 469.35 crore worth of shares. However, shares struggled in the face of profit booking by domestic institutions (-Rs 250 crore) and unwinding of positions by market operators put pressure on stock prices. But for the 2.5% rise in index heavyweight Reliance Industries, the decline in the benchmarks would have been steeper. In the Sensex, 26 out of 30 stocks ended in the red.

BSE���s 30-share Sensex ended the day at 15411.47, down 173.53 points, or 1.1% over the previous close. NSE���s 50-share Nifty shed 54.30 points to close at 4583.40. Sellers targeted second-line shares as well, with the BSE Mid-cap and Small-cap indices tumbling over 2% each.

The domination of bears was complete with retreating stocks outnumbering advancing ones 3:1. Metal and oil & gas shares were the best performers of the day, while realty stocks finished at the bottom of the heap. The selling pressure is expected to intensify in the coming days, as it appears that most of the lesser-known names in the sector may have to defer their equity-raising plans for want of sufficient investor interest.

���Several large investment plans that were mothballed in part due to election-related uncertainties will likely be put back in place,��� said a note by investment bank Goldman Sachs, analysing the IIP data. ���Policy rates have come down aggressively and there is excess liquidity in the system.

We expect the rupee to appreciate further against the dollar as the stable government and relatively resilient domestic demand become key catalysts for foreign inflows, deleveraging pressures easing further and the basic balance of payments turning positive in FY10 due to the trade deficit narrowing,��� the note added.